Federal Reserve’s James Bullard: Break-up JPMorgan and other large banks

May 21, 2012 by · Leave a Comment
Filed under: Opinion 

Sounds like its “Ma Bell” time for the large banks.    Back in the 1980’s the government found that AT&T in its current form as the the nations only carrier was too big and it hampered innovation and competition.  As a result, they split up the carrier into seven smaller regional carriers that had to compete.   This over the long run was very effective in creating a marketplace that bought more choice to consumers and opened the way for more businesses to spring up to serve this more open market.

Breaking up these large financial institutions into smaller pieces would do the things like reduce risk on the FDIC in the event of insolvency.  It would also create the ability for boutique firms to be created to do some of the specialized services that the national banks could do under one roof.  Overall it will be good for the consumers to not have as much concentration of capital and wealth in so few places, we already have the Federal Reserve System in place and that is the largest concentration of capital on behalf of the United States government, we don’t need more.  I want more local and regional banking and if you need international banking then you can go to places like New York or Los Angeles for banking firms that handle those type of services.

The point I read about defending large banking institutions is that they need this size to be competitive globally.    My question would be what size is big enough?    Why as a society should we under-write a blank check on the size they can get.   The only thing I see this size helps with is the large pile of derivatives that are at such large numbers is really looks like they are being using as some of of manner of “hiding” risk and or losses on “bets”.   I believe we are going to see a real investigation into the banks and what is going on under the skirt.    Popular support is building and as more knowledge on the financial industries inner workings come to light, more questions are going to be asked by the common man and the rising to the top until our representatives can ignore these question no longer.    This is healthy and long overdue.

Money News: Another Federal Reserve policymaker on Thursday called for the break-up of big banks like JPMorgan Chase & Co., saying that firm’s recent large trading loss underscores the difficulty of regulating such banks and the dangers they pose.

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St. Louis Fed President James Bullard says ‘Fed will act if economy weakens further’

September 30, 2011 by · Leave a Comment
Filed under: Economic News 

We are totally screwed.  I am sorry to have to use such crude vernacular but it is true.

It comes down to this, we have a debt-based monetary system in the United States and it have been replicated across the globe.    The problem we face that NONE of our officials / representatives seems to be able to own up too is that we have too much debt in our system.   When addressing debt, you have two options, pay it off or default (restructuring debt is a default).

When you are dealing with this type of monetary problem, you response can not be, “create more debt”.    That is like drinking your way out of being drunk, it is a total oxymoron.  Why does no one out there in our journalistic world have the gull to just straight up call them out on this subject.   All the options the Fed and Treasury have come up with keeps coming back to creating debt.

We need to do the following to fix the economy and yes, its painful but not as painful as it will be if we let the hole get bigger:   Raise Taxes (across the board but make it the least onerous on our poor), Reform entitlements (period, we can’t afford the current level of service) and reduce the annual budget deficit (means we spend what we tax, you want large government, then we pay for it).

I know if you don’t agree you are shaking your head and thinking, oh that is easy to write down.   Your right, it is easy.   But, we need to do it and to this point no plan I have seen seems to address these in any meaningful way.   If I was President Obama, I would do it under executive order if I had too and take the consequences in court and defend yourself there.  I believe he could make the argument that he is doing it for the welfare of the country as his duty.  It would be unpopular at first but if he could hold out and let these changes take affect, we would see major changes in how the world treats U.S. debt and equities and we would start to see a real recovery.

The last issue we need to address which is the major reason unemployment has maintained itself over 9% is because of the false promise of “free-trade”.  That term is a oxymoron in itself, if you know about exchange and barter (trade), there is always a winner and loser for an exchange in raw value.   In this era of “free-trade”, the United States is the loser and any country that can sell their manufactured goods in our domestic market is the winner.   It is basic math, if I can pay someone $400 a year compared to $44,000, which is more profitable?  With that answer, you find that is where the jobs are going and in my opinion, the housing bubble only masked the problem by creating many jobs that are not permanent and if that did not happen, we would have even worst unemployment numbers.

Now if we accept that at the expense of our national job economy we feel that we need to “share the wealth” that is one thing, but then we should state it as a national policy, not dress it up as something else and try and sell it to us by “experts”.   Middle-class income jobs are disappears and the cold hard facts are they are not coming back and even if we re-train our workforce for the “job of tomorrow”, as soon as a company figures out they can do it somewhere else for 1/10th of the pay, I’ll let you guess what happens next.

We use protectionism as such a dirty word.   It is funny we will all stand up and salute for national military defense but cower away for any mention of national economic defense.   As far as I see, it is a privilege to be able to sell in the world’s richest country, NOT A RIGHT.

Yahoo! Finance (Kristina Cooke in New York)  The Federal Reserve will act if the economy weakens further and has the tools to do so, a top Fed official said on Friday.  St. Louis Fed President James Bullard said he expects the economy to grow modestly over the next year — though the sluggish pace leaves it vulnerable to shocks.

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